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Pension Funds

United Technologies makes $1.9 billion discretionary contribution to U.S. DB plan

United Technologies Corp., Farmington, Conn., made a discretionary contribution of $1.9 billion to its U.S. pension plan during the third quarter, according to its 8-K filed with the Securities and Exchange Commission on Tuesday.

The company announced in its most recent 10-K filing with the SEC in February that it expected to make total contributions of approximately $300 million to its global pension plans in 2017.

As of Dec. 31, UTC had $30.56 billion in global pension assets, its 10-K said.

The 10-K did not break out U.S. assets. However, according to Pensions & Investments data, the company had $24.79 billion in U.S. defined benefit assets as of Sept. 30, 2016, with an asset allocation of 35% U.S. fixed income, 24% global equities, 10% U.S. equities, 7% each international equities and risk parity, 6% each cash and real estate, and 5% private equity.

According to a UTC spokesman, Chief Financial Officer Akhil Jones said at a Sept. 14 Morgan Stanley (MS) analyst conference:

"We have decided to voluntarily contribute $1.9 billion to our U.S. domestic pension plan. That allows us to almost fully fund the domestic plan, bifurcate the plan into actives and inactives, which gives us some benefit in 2018. ... It's taking advantage of the low interest rates and the high tax-rate environment that is today, generates several hundred million dollars of (net present value) and allows us to derisk the plan by taking our expected returns down to 7% from 7.6%. … The pension funding that I talked about and the changes that come with it, in spite of discount rate being down about 30 basis points, should be good news of $125 million to $150 million next year."